Final answer:
The value of categorical grants from the federal government to state and local governments has increased since the 1960s, particularly for Medicaid funding. Categorical grants allow the federal government to set conditions for funding, thereby exercising more control over state and local policy implementation. Block grants provide more flexibility but are less favored by the federal government due to the lack of attached conditions.
Step-by-step explanation:
Since 1960, the value of categorical grants provided by the federal government to state and local governments has steadily increased. During the 1960s and 1970s, the funding for federal grants grew significantly, with a more pronounced increase since the 1990s mainly due to Medicaid spending, which jumped from $43.8 billion in 1990 to $320 billion in 2014. Growing financial resources have allowed the federal government increased power over subnational governments by using categorical grants to dictate terms and conditions that state governments must meet to qualify for financial assistance in specific policy areas.
In contrast to categorical grants, block grants offer states more discretion with fewer imposed restrictions, and were prominently used during Ronald Reagan's presidency in alignment with his belief in states' better management of financial resources. However, the national government often employs categorical grants because they come with strings attached, ensuring that public monies are used for policy activities that advance national objectives. An example of such stringent conditions is the requirement for matching funds by recipients.
Furthermore, in response to disasters and national emergencies, such as hurricanes Katrina and Sandy, the national government can use categorical grants to fund local governments, with the amount often varying depending on the state's population. The Unfunded Mandates Reform Act of 1995 aimed to increase transparency and reduce the federal government's use of mandates by requiring the Congressional Budget Office to provide cost information on government mandates exceeding a specified threshold before Congress can consider the bill.